ELECTION: Real estate reacts to Johnson landslide

The Conservative Party has won a landslide victory in the General Election, and Jeremy Corbyn has signalled he will stand down as Labour leader. The prime minister Boris Johnson has declared that he now has a “powerful mandate to get Brexit done”, but a resurgent Scottish National Party also claims it has strong grounds for a second Scottish independence referendum. The Conservative Party confirmed its majority as it won its 326th seat at 5.08am, with 55 seats left to declare. So far, the property industry has broadly reacted with optimism that new Tory government will finally generate some market certainty. Here are some of the reactions: Stephen Clifton, head of commercial, Knight Frank “Real estate decision-makers have long craved greater political certainty, and this morning, that is the headline they have woken up to. We expect this clearer direction for UK politics to empower corporates to dust off expansion plans, developers to commence new schemes, and investors at home, and abroad, to quickly buy into what now looks like a very attractively priced real estate market. 2020 will therefore be a much more active year on all fronts, as the UK reconfirms its status as one of the world’s few truly global real estate markets.” Will Scoular, co-head of origination, Investec Structured Property Finance “Brexit uncertainty has been an impediment to UK economic momentum since the referendum. A Conservative majority will likely relieve some of this as the UK parliament then passes Boris Johnson’s Brexit deal, allowing Brexit by 31 January 2020. “Uncertainty will not though be eliminated as questions over the UK’s permanent trading relationship persist. Still, the removal of some of the Brexit fog should help lift business investment, UK growth and with it housing activity too.” Guy Grainger, EMEA chief executive, JLL “With 40% of carbon emissions coming from the built environment, the real estate industry will play a leading role in fighting the climate crisis, and has the expertise to help the new UK government deliver its promise to lead the way. But our house is on fire, and the target of net zero carbon by 2050 is not ambitious enough. All political parties and industries must work together and collaborate to ensure we take the necessary action before it’s too late.” Melanie Leech, chief executive, British Property Federation “Our country faces huge challenges that the property industry is uniquely placed to help tackle, be it delivering more homes and better places, supporting our town centres, spreading prosperity through our regions or creating a clear road map to creating a net-zero built environment. We hope the Prime Minister will listen and grasp the opportunity with both hands.” Randeesh Sandhu, chief executive, Urban Exposure “The Conservative majority delivered at the General Election is the best result for the UK property sector. They are clearly the party that has been and looks set to continue to support home ownership with a series of initiatives in their manifesto focused on supporting first-time buyers, such as the proposed mortgage deposit scheme. “We expect the housebuilding market to also be boosted by a resurgent UK economy in 2020, particularly as and when Brexit is resolved. The RICS survey yesterday showed the property industry believes getting Brexit done will trigger surge in housing market and we very much subscribe to that view. The prospect of a trade deal will have a positive impact across supply chains, as well on demand, as greater certainty breeds improved confidence throughout the sector. “Although the timing of any deal is clearly not confirmed, the UK economy and property sector starts from a position of strength, with the ongoing growth in wages outpacing inflation which, in turn, should keep interest rates at record lows. All this adds up to healthy picture for UK housing demand.” Charles Begley, executive director, London Property Alliance “We believe London’s importance to the UK was underplayed in the party manifestos and pre-election campaigns. “We hope the prime minister as a former mayor of London will fully recognise the capital’s vital economic contribution, investing to ensure that the it retains its position as a leading global city and also delivers the major transport infrastructure which will enable regional cities to benefit and prosper through the 2020s.” David Westgate, group chief executive, Andrews Property Group “Such a conclusive victory for Boris Johnson has the potential to turbocharge the property market and get it out of its current rut. “For three years the property market has been gripped by political uncertainty and deadlock, but now it can finally move on. “There’s every chance we are now at the beginning of a market cycle that may not peak until 2027 or beyond, with growth of around 4% a year. “We now need a housing minister with a properly costed and fully structured long-term plan that looks beyond building a certain number of homes each year. “The structural issues in the property market will still be there when the euphoria of the Conservatives has faded.” Jonathan Samuels, chief executive, Octane Capital “The UK property market got the result it wanted. After three years of stagnation, the extent of the Conservative victory could see transaction levels really pick up in 2020. “While the General Election result was decisive, the hard yards have yet to be done and the full impact of Brexit remains to be seen. Price growth in 2020 is likely to be a lot more robust than in recent years but what we don’t want is for values to suddenly get ahead of themselves. “The property market will enter 2020 with a spring in its step but all eyes will be on how the economy holds up as we exit the EU.” Ed Cooke, chief executive, Revo “The future of our high streets, town centres and retail places is at a critical moment and the new government has the opportunity to set a positive agenda for growth, reform and investment. “Fundamental to this is an extensive review of the business rates system as part of a wider reassessment of how we tax business and property. Retailers paid almost £8bn in business rates in the past year and this 50% tax, has been the root cause of a number of business failures and places three million UK jobs in jeopardy. “Government also has a unique opportunity to invest directly in town centres and high streets, and there should be renewed focus on local infrastructure including small scale transport improvements and public realm. With the Town Centre Fund and Future High Street Fund established the mechanisms are already in place to make positive interventions, in the places most in need, urgently.” Walter Boettcher, chief economist, Colliers International “After three and a half years of political and regulatory uncertainty, which has eroded economic performance through lack of business confidence, we now have a modicum of certainty which should be enough for many businesses to begin investing in expansion. “While the ink is certainly not dry on either the EU withdrawal agreement, or on the terms of the EU trade deal, the broad contours are generally understood and there is less concern about an acrimonious departure. Whether this proves sufficient for all investors only time will tell. “Sterling has rebounded and will continue to rise back toward pre-Brexit levels as further milestones in the UK departure are reached. Hopefully, the new government will find the time and resolve to begin to push forward a long-delayed agenda for national economic renewal and the long-awaited push on infrastructure and regional development.” Manish Chande, senior partner, Clearbell “The strong Conservative majority means that we can expect some degree of resolution to the current uncertainty that has frozen business decisions for the past few years. The immediate positive impact on sterling, which has soared to its highest level since June last year, may well mean real money investors begin to put their head above the parapet. “The property market should now return to fundamentals, as it looks to the usual drivers that affect the market, such as supply and demand for space and investment appetite. However, the continuing lack of clarity about the UK’s future trade relations with the EU and the future economic cost may still be a sticking point for some investors.” Patrick Plant, real estate partner, Linklaters “Our clients and those we know have an appetite to invest in UK real estate, above all, are looking for stability and certainty in how we are governed and taxed. Whatever way you may have voted, we now have that and we expect a significant increase in deals as a result. Deal flow in the last few months has been lower than I have known in over 30 years: not because investors have lost interest in our market; they have simply not been prepared to bet on the outcome of what occurred this morning. “Brexit remains out there but the mandate our new government has received means it is likely to have greater flexibility to negotiate something more measured and less constrained by the numbers in parliament. Fingers crossed!” See also: What the data says the next government could mean for property